Bulletin of Monetary Economics and Banking (BMEB) / Buletin Ekonomi Moneter dan Perbankan
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Potential Implications of the Pandemic on Medium Term Productivity
Full text linkThis study analyses the potential medium-term impact of the pandemic to productivity and macroeconomy. It simulates the impact of the pandemic on productivity, labor and macroeconomic dynamics. The simulation is carried out using simple variations of real business cycle models, with shock on consumption-leisure preference which are endogenously responded by technology. Simulation results are consistent with macroeconomic dynamics observed during the pandemic and therefore may imply medium term prospects. In addition, permanent application of technology to replace pandemic-related labour restrictions is superior for medium-term growth
Identifying Herding Behavior Using Garch Before and During the Covid-19 Pandemic
Full text linkThis paper examines herding behavior in the Indonesian and Chinese capital markets before and during the COVID-19 pandemic. Stocks listed in the LQ45 (Indonesia) and SSE50 (China) in 2015-2021 are utilized. The results of daily data analysis of the dispersion of individual stock returns against market returns indicate that GARCH is a reliable model. We find that LQ45 investors do not exhibit herding in bullish/bearish conditions, including extreme markets during the pandemic. The findings indicate that high market volatility is not related to herding behavior. Nevertheless, SSE50 investors exhibit a different behavior, i.e., herding occurred in bearish conditions before the pandemic. These results imply that although institutional and long-term-oriented investors dominate the blue-chip stocks, they still make decisions by imitating market consensus or other investors. The presence of herding strengthens the behavioral finance theory regarding irrational behavior. However, the volatility index does not affect the herding model on both indices
Macroeconomic Modelling Towards Achieving Sustainable Development Goal-13 in India
Full text linkThis study develops a macroeconomic model to examine the relationships between the energy sector, economic growth and the environment in India over the period 1971 to 2021. Aligning with the United Nations SDG-13 and using the Seemingly Unrelated Regression Equation (SURE) model, we find that the services and agriculture sectors, non-renewable energy consumption, government expenditure, money supply, carbon dioxide emissions per capita, inflation, and population are crucial factors. The services sector and government spending notably impact economic growth and environmental degradation due to increased energy demand and emissions
The Determinants of FDI Inflows in the Indonesian Manufacturing Sector: Some Evidence from Spatial Dependency Measurements
Full text linkThe determinants of Foreign Direct Investment (FDI) inflow in the manufacturing sector of Indonesian provinces are the focus of this study. This study demonstrates that spatial dependency in Indonesian FDI location decisions is primarily influenced by cultural heterogeneity and geographic distances, as determined by the Spatial Durbin Model. This finding suggests that the inflow of FDI into a host province is influenced by FDI inflow and other factors in neighboring provinces that are geographically adjacent to the host province and have a similar level of cultural heterogeneity. The primary determinants of these factors are the infrastructure in neighboring provinces and the human capital and innovation capability of the host province
Monetary Policy Interest Rates and Bank Risk return Tradeoff: How Does Bank Competition Moderate this Relationship?
Full text linkThis study empirically examines the moderating effect of bank competition on the link between monetary policy interest rates and bank risk-return dynamics in Vietnam from 2007 to 2019. The findings suggest that during monetary expansion, marked by decreasing interest rates, banks typically employ a more conservative strategy regarding their credit portfolios, thereby minimizing risk exposure. Nonetheless, this risk avoidance incurs reduced interest margins, decreased overall profitability, and compromised stability. Furthermore, the research utilizing both traditional and funding-adjusted Lerner indices indicates that increased market concentration, or diminished bank competitiveness, mitigates the impact of monetary policy interest rates on the trade-off between bank risk and return
Loan Restructuring and Deposit Growth: Evidence from the Market Discipline during the COVID-19 Outbreak
Full text linkAmid the COVID-19 pandemic, banks boosted loan restructuring efforts to offer borrowers assistance and preserve credit quality. This study employs dynamic and static panel data from Indonesian commercial banks to include restructured loans as a metric for assessing market discipline prior to and during the pandemic. Depositors shown discipline about banks’ credit risk during the COVID-19 period and exhibited heightened sensitivity to restructured loans. Subsequent analysis indicates that the association between deposit growth and restructured loans was more pronounced in government, small, and publicly listed banks during the outbrea
Independence of Central Banks in Nondemocratic Regimes: Implications for Price Stability
Full text linkThis study examines the impact of central bank independence on inflation in nondemocratic regimes, with a specific focus on the differences between Islamic and nonIslamic groups. It utilizes nonstationary heterogeneous panels to estimate both the longrun and short-run responses of inflation to central bank independence. Additionally, it employs a panel smooth transition regression model to identify any potential threshold effects in this relationship. Our findings reveal an inverse relationship between central bank independence and inflation rates for both groups in the long run. Our result suggests that non-Islamic authoritarian countries may struggle more than Islamic ones to maintain price stability through interest rate channels, which could explain their increasing adoption of a zero interest rate policy. Furthermore, we find evidence of threshold effects that, if overlooked, could result in biased conclusions
Performance of Digital Economic Indicators During the Covid-19 Pandemic: Payment System Case of Indonesia
Full text linkWe explore the performance of digital payment system instruments during both the pre-COVID-19 period and during the pandemic. We focus on four main digital economic indicators in Indonesia; namely, electronic money, Automated Teller Machine (ATM), digital banking, and Real Time Gross Settlement (RTGS) transactions. Using monthly data covering the period 2013:01 to 2023:04 obtained from Bank Indonesia, we employ the Difference-in-Differences method to assess the impact of the pandemic on digital economic indicators. The results show that during the pandemic, generally, the transaction value of electronic money, digital banking and RTGS are continuously upward trending, while the number of electronic money and ATM cards per month were more during the pandemic than pre-pandemic
FDI Spillovers and Wage Gaps in Indonesia
Full text linkOur objective is to evaluate the competitiveness of local firms by determining whether the dynamic wage spillover model devised by Tomohara and Takii (2011) consistently captures subsectoral dynamics. We identify two subsectors that are witnessing positive spillovers using the Indonesian firm-level dataset. Nevertheless, our quantitative analysis demonstrates inconsistencies, with competitive subsectors contributing to wage disparities at a higher rate than uncompetitive firms. In other words, wage inequalities between foreign and local firms are not effectively reduced by competitive firms. In order to improve the performance of local firms and enable them to more effectively compete with foreign firms in labor markets, international trade policies should incorporate social and labor support, such as advanced skills training and education
Twitter Based Uncertainty and Stock Returns Connectedness In Case of Selected APEC Countries
Full text linkThe aim of the paper is to unravel evidence of non-linear causality and connectedness between Twitter-based uncertainty and stock market returns for selected APEC countries. By using a non-linear Granger causality test, the study finds that Twitterbased uncertainty causes stock returns of Japan and Singapore. Further, the results also confirm the presence of volatility spillover between Twitter uncertainty and stock returns. Thus, volatility spillover from Twitter-based uncertainty and financial market returns provides insights to investors on adjusting their investments between the countries